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    ACC123 GrossProfitMethod&RetailInventoryMethod Lagurin

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    khryzellia lagurin
    The document contains information and calculations for multiple accounting problems related to inventory valuation. Problem 13-5 provides details on calculating cost of goods available for sale, cost of goods sold, and estimated cost of inventory shortage. Problem 13-12 shows calculations for purchases, sales, and inventory fire loss for a year. Problem 14-7 provides extensive inventory account information using both cost and retail approaches to calculate ending inventory under different methods.

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    ACC123 GrossProfitMethod&RetailInventoryMethod Lagurin

    Uploaded by

    khryzellia lagurin
    52 views2 pages
    The document contains information and calculations for multiple accounting problems related to inventory valuation. Problem 13-5 provides details on calculating cost of goods available for sale, cost of goods sold, and estimated cost of inventory shortage. Problem 13-12 shows calculations for purchases, sales, and inventory fire loss for a year. Problem 14-7 provides extensive inventory account information using both cost and retail approaches to calculate ending inventory under different methods.

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    The document contains information and calculations for multiple accounting problems related to inventory valuation. Problem 13-5 provides details on calculating cost of goods available for sale, cost of goods sold, and estimated cost of inventory shortage. Problem 13-12 shows calculations for purchases, sales, and inventory fire loss for a year. Problem 14-7 provides extensive inventory account information using both cost and retail approaches to calculate ending inventory under different methods.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    52 views2 pages

    ACC123 GrossProfitMethod&RetailInventoryMethod Lagurin

    Uploaded by

    khryzellia lagurin
    The document contains information and calculations for multiple accounting problems related to inventory valuation. Problem 13-5 provides details on calculating cost of goods available for sale, cost of goods sold, and estimated cost of inventory shortage. Problem 13-12 shows calculations for purchases, sales, and inventory fire loss for a year. Problem 14-7 provides extensive inventory account information using both cost and retail approaches to calculate ending inventory under different methods.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    KHRYZELL GUILL V.

    LAGURIN 1-MA11

    PROBLEM 13-5

    1. What is the cost of goods available for sale?


    BEGINNING INVENTORY 5,000,000
    PURCHASES 26,000,000
    FREIGHT IN 2,000,000
    PURCHASE RETURNS & ALLOWANCES (3,500,000)
    PURCHASE DISCOUNT (1,500,000)
    COST OF GOODS AVAILABLE FOR SALE 28,000,000

    2. What is the cost of goods sold?


    SALES 40,000,000 NET SALES 100%
    SALES RETURNS (3,000,000) GROSS PROFIT RATE ON SALES (40%)
    NET SALES 37,000,000 COST RATIO 60%
    MULTIPLY BY RATIO 60%
    COST GOODS SOLD 22,200,000

    3. What is the estimated cost of inventory shortage?


    COST OF GOODS AVAILABLE FOR SALE 28,000,000
    COST OF GOODS SOLD (22,000,000)
    ENDING INVENTORY 5,800,000
    PHYSICAL COUNT (4,000,000)
    COST OF GOODS OUT ON CONSIGNMENT (1,000,000 x 60%) (600,000)
    COST OF INVENTORY SHORTAGE 1,200,000

    PROBLEM 13-12

    AVERAGE RATE = GROSS PROFIT / SALES


    = 3,200,000 / 8,000,000
    = 40%
    1. What is the amount of purchases for the current year?
    PAYMENTS TO SUPPLIERS 1,600,000
    ACCOUNTS PAYABLE – JAN. 1 500,000
    ACCOUNTS PAYABLE – DEC. 31 (400,000)
    PURCHASES 1,700,000

    2. What is the amount of sales for the current year?


    COLLECTION ON ACCOUNTS RECEIVABLE 2,640,000
    ACCOUNTS RECEIVABLE – DEC. 31 440,000
    ACCOUNTS RECEIVABLE – JAN. 1 (480,000)
    SALES 2,600,000
    3. What is the inventory fire loss on December 31, 2020?
    INVENTORY – JANUARY 1 500,000
    PURCHASES 1,700,000
    GOODS AVAILABLE FOR SALE 2,200,000
    LESS: SALES 2,600,000
    COST OF GOODS SOLD (2,600,000 x 60%) 1,560,000
    INVENTORY – DECEMBER 1 640,000
    LESS: GOODS ON CONSIGNMENT (200,000 x 60%) 120,000
    SALVAGE VALUE 20,000 140,000
    FIRE LOSS 500,000

    PROBLEM 14-7
    COST RETAIL
    BEGINNING INVENTORY 650,000 1,200,000
    PURCHASES 9,000,000 14,700,000
    FREIGHT IN 200,000
    PURCHASES RETURNS (300,000) (500,000)
    PURCHASES ALLOWANCE (150,000)
    DEPARTMENTAL TRANSFER IN 200,000 300,000
    MARK – UP 300,000
    GOODS AVAILABLE FOR SALE – CONVENTIONAL 9,600,000 16,000,000
    COST RATIO (9,600,000 / 16,000,000) 60%
    MARK – DOWN (1,000,000)
    GOODS AVAILABLE FOR SALE – AVERAGE 9,600,000 15,000,000
    COST RATIO (9,600,000 / 15,000,000) 64%
    LESS: SALES 9,500,000
    SALES DISCOUNT 100,000
    EMPLOYEE DISCOUNT 500,000
    SHOPLIFTING LOSSES 600,000
    SHRINKAGE 400,000 11,000,000
    ENDING INVENTORY 4,000,000

    1. What is the estimated cost of ending inventory using the conservative approach?
    4,000,000 x 60% = 2,400,000
    2. What is the estimated cost of ending inventory using the average cost approach?
    4,000,000 x 64% = 2,560,000
    3. What is the estimated cost of ending inventory using the FIFO retail approach?
    COST RETAIL
    INVENTORY – JAN. 1 650,000 1,200,000
    PURCHASES ADJUSTED 8,950,000 13,800,000 (65%)
    GOODS AVAILABLE FOR SALE 9,600,000 15,000,000
    SALES (11,000,000)
    INVENTORY – DEC. 31 4,000,000
    FIFO COST (4,000,000 x 65%) = 2,600,000

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